The Indian stock markets closed lower on Tuesday after a weak trading session, as escalating geopolitical tensions and concerns over inflation due to high crude oil prices kept investors on edge.
The cautious mood came after US President Donald Trump issued a strong warning to Iran, saying Tehran should have opted for a nuclear deal with the United States amid the ongoing conflict in the Middle East.
Both the benchmarks opened flat and briefly moved higher, but quickly lost momentum as selling pressure intensified through the session.The Sensex fell by 212.85 points to settle at 81,583.30, after touching an intra-day low of 81,427.
The Nifty also ended lower by 93.10 points, closing at 24,853.40. "The benchmark equity index experienced moderate losses amid rising risk of an escalation of conflicts in the Middle East ahead of the FOMC meeting,” said Vinod Nair of Geojit Investments Limited.
“This uncertainty pushed Brent crude prices higher an unfavourable development for India, given its heavy reliance on oil imports, thereby dampening earnings growth,” Nair added. Broader markets followed suit, with the Nifty Midcap100 and Nifty Smallcap100 indices falling 0.79 per cent and 0.82 per cent, respectively.
Sector-wise, only the IT sector managed to stay in positive territory. The rest saw selling across the board. Pharma and metal stocks were the biggest losers, with the Nifty Pharma index falling by 1.89 per cent and the metal index down 1.43 per cent.
Other sectors like consumer durables, oil and gas, realty, auto, energy, FMCG, and media also ended with losses of up to 1 per cent. Out of the 30 Sensex stocks, the biggest drags were Tata Motors, Sun Pharma, Bajaj Finance, IndusInd Bank, Bajaj Finserv, Eternal and Nestle India.
On the positive side, Tech Mahindra, Infosys, Asian Paints, Maruti Suzuki, NTPC, TCS, and HCL Tech provided some support to the market with modest gains. Sundar Kewat of Ashika Institutional Equity said that rising crude oil prices are fueling inflation worries in India, the world’s second-largest oil importer, which also contributed to the negative mood.
“Investors are now looking ahead to the US Federal Reserve’s interest rate decision on Wednesday, which could have a major impact on global markets and influence investor sentiment going forward,” Kewat added.Meanwhile, rupee traded weak by 0.18 rupees at 86.22 as rising risk sentiment from escalating Israel-Iran tensions weighed on the currency.